Debenhams Eyeing Turnaround – BinaryOptions

Debenhams has been given some great news in a challenging retail market, with the announcement that it had its best surge in intraday sales for nearly two years this week. The news follows the announcement that House of Fraser, one of its main high-street rivals, is planning to close stores in response to challenging high-street trading conditions.

Hosue of Fraser has been hit particularly hard by the ‘Amazon effect’, with big town centre stores owned by both HoF and Debenhams feeling the pinch.

A Chinese buyer, C. Banner International Holdings will buy a controlling stake if House of Fraser commits to delivering a challenging programme of rent negotiation and store closures in underperforming branches. Thousands of retail jobs will be put at stake as a result, but the move will be positive for Debenhams.

Falling Value

In the past three years, Debenhams has dwindled in value to just £300m from £1.1bn as digital, ambitious rivals have positioned themselves expertly and with nimble business models to grab retail market share.

Analysts also believe that Sports Direct, which is the biggest shareholder in Debenhams, will be interested in the changes as it has ambitions to become a higher-end and ubiquitous high-street sports brand.

Debenhams’ board said that they were not planning to overplay the news about the House of Fraser store closures, but investors were ready to act nonetheless, helping the company’s share price to increase by 4.7% to 24.6p. The share price of Sports Direct also moved a little higher, to 405.2p as a gain of 1.3p.

Other UK Firms Struggle

While Debenhams was enjoying a good day, however, BT was enduring its worst day of trade this year, after a profit warning from Barclays that said the FTSE 100 giant was looking poorly positioned against wholesale market competition.

Sainsbury’s shares also suffered a slight drop of 3p, back to 3.02p, after the competition watchdog continued to progress its greatly called-for investigation into the grocery brand’s possible merger with ASDA.

Overall, the FTSE 100 treaded water, and Wall Street experienced a slew of disappointing earnings results and the impact of ongoing political concerns at an international level.